Gas Lines A Good Sign? Only in Moscow

By
Justin Burke /
May 27, 1993

MOSCOW

LINES are nothing new at gas pumps here. But in the past few days the queues have grown by a quantum leap, snaking up to a half-mile.

In the United States, lines would be a sign of economic turmoil, conjuring up memories of the 1973 Arab oil embargo. But in Russia, with its abundant energy resources, the long gas lines hint that the country is getting its economic act together.

On Tuesday, President Boris Yeltsin's press service said a price freeze on fuel products would be repealed. That announcement followed what leading reformers termed an "historic" agreement Saturday between the government and the Central Bank to restrict the provision of state credits to industry.

Full implementation of the measures would help the government overcome some major reform obstacles, including controlling skyrocketing inflation. But, in the case of the government-Central Bank agreement, few expect the pact to hold.

"We'll see in the next two weeks if the bank plans to take decisive action," a skeptical Deputy Prime Minister Boris Fyodorov told a news conference. Mr. Fyodorov has been an outspoken critic of Central Bank Chairman Viktor Gerashchenko. Fyodorov maintains that the bank's provision of massive credits to struggling state enterprises is fueling inflation, estimated at 17 percent in April.

Under the pact, the government and the bank, which has been subordinate to the conservative parliament, will formulate a credit policy aimed at reducing monthly inflation to less than 10 percent by year's end.

The agreement paves the way for a $3 billion International Monetary Fund loan to Russia.

Subsidized energy prices, meanwhile, have been a stumbling block to reform because they encourage waste and inefficiency, economists say. Mr. Yeltsin's price liberalization allows Russian energy prices to move toward world levels. Energy currently costs 60 percent of world prices. Rumors that gasoline prices will double - from 45 to 90 rubles (4.5 to 9 cents) per liter - have caused the long gas lines.

Last month, Yeltsin ordered a price freeze on energy (at March 1 levels) in an admittedly political move on the eve of the national referendum. Retreating on his price-freeze pledge is already costing him political capital.

"What kind of idiots do the authorities take citizens to be?," Vitaly Marsov wrote in the Nezavisimaya Gazeta daily.